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Finance Working Group May 11, 2017 T2040 Financial Strategy Update
Finance Working Group
May 11, 2017
T2040 Financial Strategy Update
Today’s Meeting
• Preliminary Expenditures by Program
• Current Law Revenue Review
• Preliminary Revenue Gaps by Program
• How to Fill Revenue Gaps
• What’s next?
Today’s Agenda
Process & Timeline
Current Law
Revenue
New Revenue Sources
System Expansion
Costs
Maintenance Preservation &
Operation Needs
Plan Balancing
Draft Financial Strategy
Final Financial Strategy
Current Law
Revenue
New Revenue Sources
System Expansion
Costs
Maintenance Preservation &
Operation Needs
Plan Balancing
Draft Financial Strategy
Final Financial Strategy
Nov 2016 -Jan 2017
Jan 2017 -Mar 2017
June 2017
July 2017
Apr 2017 -May 2017
Apr 2017 -May 2017
Dec 2017 -Feb 2018
Working Group recommendation
TPB Action on Draft Financial
Strategy
Released in the draft
T2040 Plan
Today’s Meeting
Important Note
Moving forward PSRC will be communicating revenues and expenditures in constant $2018
for the period of 2018-2040
Today’s Meeting
Preliminary Expenditure Estimates
Expenditure Review – Cities
• Outcome driven maintenance & preservation estimates
• Better link to local capital planning
• More explicit integration of TDM & ITS programs
• Revised project list
DRAFT M&P: $23b
Imp: $19b
Total: $42b
Expenditure Review – Counties
• Outcome driven maintenance & preservation estimates
• Better link to local capital planning
• More explicit integration of TDM & ITS programs
• Revised project list
DRAFT M&P: $12b
Imp: $ 3b
Total: $15b
Expenditure Review – Local Transit
• Integration of local transit long range plans
• New estimates of system-wide capital investments
• Integrated transit network (REMIX)
DRAFTExisting: $25.7b
New: $11.1b
Cap: $6.2b
Total: $43b
*Does not yet include TDM
*
Expenditure Review – Sound Transit
• Financial plan provided by Sound Transit financial planning staff
• Incorporates Sound Transit 3 package
• Funds all existing and future ST operations
• Constructs light rail to Everett, Tacoma, Issaquah, & Redmond
DRAFTSM/ST2: $21b
ST2/ST3:$41b
Total: $62b
Expenditure Review – WSF
• Reflects latest estimates provided by Washington State Ferries
• Operates all routes within region
• Maintains and preserves all terminals
• Includes replacement of all vessels
DRAFT M&P: $7b
Imp: $.3b
Total: $7.3b
Expenditure Review – State Hwys
• Provided by WSDOT staff
• Includes maintenance and preservation needs
• Traffic operations
• Fish-passage barriers
• Safety investments
• Major capacity
DRAFT M&P: $9b
Imp: $16b
Total: $25b
*Does not yet include bridge preservation, TDM
*
Total Investment
M&P: $97.7b
Imp: $96.7b
Total: $194.4b
DRAFT
Expenditures– Remaining Tasks
• Integrate “1% for TDM” into local transit and state highway programs
• Finalize local transit network and service hour assumptions
• Determine maintenance & preservation vs. system improvement elements for POF and Sound Transit
• Categorize WSF terminal projects (M&P or system improvement?)
• Integrate WSDOT bridge preservation cost estimates
Today’s Meeting
Current Law Revenue Review
Current Law Revenue Review• Technical updates
• Land use and regional economic forecasts• Latest historic revenue information
• Integration of new funding packages• Connecting Washington• Sound Transit 3• City and county (TBDs and ballot measures)• Transit initiatives
• Reviewed key financial assumptions• State highway rate of return• City and county general fund revenue contributions for transportation• Federal fund assumptions
Updated Current Law Revenue
T2040 Current Law Revenues, 2018-2040 (mill ions of year $2018 constant dollars)
Counties 10,000$
Cities 20,400$
Local Transit 34,400$
Sound Transit 61,600$
State Ferries 5,100$
State Highways 19,300$
Other Regional -$
TOTAL 150,800$
DRAFT
Today’s Meeting
Preliminary Revenue Gaps
City Revenue Gap
DRAFT $21.5 billion gap to fund city
preservation and system
improvements
2018 - 2025
County Revenue Gap
$5.1 billion gap to fund county
preservation and system
improvements
DRAFT
Local Transit Revenue Gap
$8.7 billion gap to fund capital and
service expansion identified in long
range transit plans
Sound Transit Revenue Gap
Fully funded under existing
authority
DRAFT
WSF Transit Revenue Gap
$2.5 billion gap to fully fund state ferry operations and preservation
DRAFT
State Highways Revenue Gap
$5.7 billion gap* to fully fund
highway preservation,
operations, fish-passage, and major capital improvements
DRAFT
*Does not yet reflect bridge preservation
Total Revenue Gap
T2040 Gap$44-50 billion
DRAFT
Revenue Gap – Remaining Tasks
• Address remaining expenditure tasks
• Finalize current law revenue assumptions
• Begin process of developing new revenue assumptions
Today’s Meeting
Approach to Filling Revenue Gap
Principles Framing New Revenue Scenario Development• Maintain existing strategy of increasing current sources while
transitioning to user-based fees in the long-run
• Develop revenue tools to address local needs in the near-term
• Develop a long-term financing solution that includes a price signal for system management and to assist with GHG reduction.
• Develop an equitable financial strategy that does not disproportionately burden different user classes
1. Sufficient
2. Diverse, Stable, and Predictable
3. Support the Region’s Vision
4. Equity
5. Feasible
Evaluation Criteria
Revenue Source Sufficient, Diverse, Stable, Predictable, Vision, Timing
Fuel TaxUpper level for tax rate, declining base(useful short term), limited to highways
Motor Vehicle Fees Medium to low rates, stable and predictable, flexible uses
Motor Vehicle Excise Tax
Limited use today, stable and predictable, flexible
Sales Tax Upper level for tax rate, hard to predict, local uses primarily transit
Tolled Express LanesLow Funding Source
(good option for congested corridors)
Tolled New Capacity / Bridges
Limited to Highways / Specific Projects
General Property Taxes Tax rate challenges, hard to predict as competes with other needs
Project Specific Property Fees
Low Funding Source(useful for localized application)
Regional Impact Fee Fees tied to growth; revenue depends on the rates should this be considered
Revenue Sources Options/Menu
Revenue Source Sufficient, Diverse, Stable, Predictable, Vision, Timing
Street Maintenance Utility
New, similar to property assessment, could help meet local needs
Motor Fuel Sales TaxHard to predict, declining base,
(useful short term)
Tolled Highway System
Revenue generation can be substantial, useful 5 years or later
Road Usage Charge Revenue generation can be substantial, useful 10 years or later
General Carbon Tax General revenue sources, competes for resources, hard to predict
Carbon Tax on Motor Fuels
Similar to fuel tax, can be supplemental source
Employee Tax New, but formerly used in Seattle, general revenue source could help meet local needs
Regional ParkingCharge/Tax
General, flexible revenue source, encourages non-auto trips, could help meet local needs
Revenue Sources Options/Menu
Yield & Reliance on Revenue Sources in Adopted Plan
New City & County Revenues (Incremental Changes)
2010 - 2020 2021- 2030 2031 - 2040
Regional Impact Fees ($/unit and job space) - $1,700↑ -
Regional Parking Surcharge - 2.5%↑ 2.5%↑
Road Levy (property tax) - Lift Lid Lift Lid
Employee Tax (per employee per month) - $1↑ $1↑
Vehicle License Fees $20↑ $20↑ -
Street Utility (per household per month) - $2↑ $2↑
MVET (city and county portion) 0.6%↑ - -
New City & County Revenue Assumptions in Current Plan
New City & County Revenues (Incremental Changes)
Regional Impact Fees ($/unit and job space)
Regional Parking Surcharge
Road Levy (property tax)
Employee Tax (per employee per month)
Vehicle License Fees
Street Utility (per household per month)
MVET (city and county portion)
New City & County Revenue Assumptions
Continue to rely on these sources?
Assume current legal restrictions?
New Transit & Ferry Revenues (Incremental Change)
2010 - 2020 2021- 2030 2031 - 2040
MVET (transit portion) 0.9%↑ - -
Sales Tax (relative to 2010) - .4% ↑ .1% ↑
Transit Fare Increase (relative to 2010) 10%↑ 10%↑ -
Ferry Fare Increase (relative to 2010) 10%↑ - 10%↑
New Transit & Ferry Revenue Assumptions
New Transit & Ferry Revenues (Incremental Change)
MVET (transit portion)
Sales Tax (relative to 2010)
Transit Fare Increase (relative to 2010)
Ferry Fare Increase (relative to 2010)
New Transit & Ferry Revenue Assumptions
Continue to rely on these sources?
Assume current legal restrictions?
New State Revenues (IncrementalChange)
2010 - 2020 2021- 2030 2031 - 2040
Fuel TaxPortion of fuel tax increases bonded to pay for early DOT projects
and repaid through dedicated fuel tax increases through 2040*
Facility TollsToll Financed, Facility,
HOT LanesFacility,
HOT Network-
* In final decade of plan, fuel tax is replaced with user fee revenues. Repayment of bonds shifts from fuel tax to user fee revenues.
New State Revenue Assumptions
New State Revenue Assumptions
New State Revenues (IncrementalChange)
Fuel Tax
Facility Tolls
Continue to rely on these sources?
Assume current legal restrictions?
New Revenues(Incremental Changes)
2010 - 2020 2021- 2030 2031 - 2040
Fuel Tax (relative to 2010) $.10 ↑ $.05 ↑ -
Highway System Tolls - - Limited Access Facilities
Road Usage Charge - $.015/VMT↑ $.005/VMT↑
Note: Undedicated new revenues have been allocated within existing constraints. In practice these revenues would likely be dedicated to specific projects/programs, however these have yet to be Identified.
New Revenue Assumptions –Flexible Sources
New Revenues(Incremental Changes)
Fuel Tax (relative to 2010)
Highway System Tolls
Road Usage Charge
New Revenue Assumptions –Flexible Sources
Continue to rely on these sources?
Assume current legal restrictions?
Other Sources?
Missing anything?
Next Steps to Filling Gaps
Create “Straw Scenario” based on FWG direction
Generate new revenue estimates
Allocate new revenues to appropriate program areas based on need and implementation constraints
Review “Straw Scenario” with TPB, refine recommendations
Process & Timeline
Current Law
Revenue
New Revenue Sources
System Expansion
Costs
Maintenance Preservation &
Operation Needs
Plan Balancing
Draft Financial Strategy
Final Financial Strategy
Current Law
Revenue
New Revenue Sources
System Expansion
Costs
Maintenance Preservation &
Operation Needs
Plan Balancing
Draft Financial Strategy
Final Financial Strategy
Nov 2016 -Jan 2017
Jan 2017 -Mar 2017
June 2017
July 2017
Apr 2017 -May 2017
Apr 2017 -May 2017
Dec 2017 -Feb 2018
Working Group recommendation
TPB Action on Draft Financial
Strategy
Released in the draft
T2040 Plan
Thank you.
Pavithra ParthasarathiPrincipal [email protected]
Benjamin BrackettSenior [email protected]
Ben BakkentaProgram [email protected]
